Tesla’s Shanghai Energy Storage Plant Begins Trial Production

US automobile company Tesla’s Shanghai energy storage Megafactory recently began trial production.The new plant is dedicated to manufacturing Megapacks, Tesla’s energy-storage batteries, with mass production expected to commence fully in the first quarter of 2025, Tesla China told Xinhua. The Megafactory is the first of its kind that Tesla has built outside the United States. At its launch ceremony in May, Tesla signed a deal with Shanghai Lingang Economic Development (Group) Co Ltd, securing the first batch of orders for its Megapacks in China.

The facility was built with an initial annual production capacity of 10,000 units, equal to around 40 gigawatt-hours of energy storage, according to the company. The project is Tesla’s second plant in Shanghai.

Trial production was launched just seven months after construction began, setting a new record for “Tesla speed” in China, with the Shanghai Gigafactory — Tesla’s first plant in the country’s eastern financial hub — having been built and inaugurated within a year in 2019.

With half of Tesla’s global vehicle production capacity based in Shanghai, thanks to China’s dominant role in the new energy vehicle supply chain, Tesla’s two Shanghai factories underscore the impossibility of decoupling for US firms from China.

Megafactory

The megafactory covers approximately 200,000 square meters an area. The new plant represents a total investment of about 1.45 billion yuan (about 201.7 million US dollars), according to the administration of the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone.

Chinese Allies Turn Competitors

Multiple Chinese firms like BYD and CATL have transitioned smoothly from their beginnings as white label suppliers or OEM suppliers to manufacturers with their own brands. CATL, the largest EV battery maker worldwide has moved swiftly to take leadership in the LFP battery segment, besides announcing plants in the sodium ion space as well, making its intentions clear to cove the full EV supply chain. Tesla’s Megapack will also face a stiff challenge wresting marketshare from Chinese firms like Sungrow that have made huge strides in the energy storage space recently.  Storage price drops have been the highlight of 2024 in the renewable energy space in many ways, changing the economics of many other sectors like offshore wind and even Green hydrogen significantly, as investors figure out the practicality of chasing other technologies when storage linked to solar and onshore wind itself is so competitive.